FE Investments is offering sustainable investment reports for retail investors on its Responsibly Managed portfolio range.
The new reports give an environmental overview of the portfolio (including measurements relating to fossil fuels, nuclear power, green energy and pollution prevention), exposure to controversial industries (such as alcohol and tobacco) and key social and governance metrics (such as gender and ethnic diversity breakdowns at executive level within underlying holdings).
“Although ‘ESG’ has become the catch-all term within the industry, it is not particularly helpful for financial advisers when discussing investment options with their clients,” said Rob Gleeson (pictured), CIO at FE Investments.
“No retail client wants an ‘ESG’ portfolio; they want to make investments that adequately reflect their beliefs.”
Analysis of each fund in the portfolio is complemented by an ESG analysis, scoring the funds’ carbon intensity, impact solutions, controversial industry exposure and giving them an FEI ESG score. Scores are supported by additional information on why the investment is being held, with FE hopes advisers will find useful in explaining to clients.
“The issue of reporting in sustainable investing is highly complex and what we aim to do is to provide the adviser with as much information as possible to discuss with clients,” Gleeson added.
“A good example of this is a fund that holds bonds issued by Transport for London (TFL). TFL has, by the nature of its industry, a high carbon footprint, but its ultimate ambition is to reduce carbon emissions by taking private vehicles off the road. Within the reporting, this is clearly set out with an ESG analysis of the fund, allowing the adviser to be able to answer any questions their clients might have.”
FE said the new reports aim to help advisers manage their obligations under new UK regulations, which are based on updates to MiFID II, requiring advisers to assess sustainable investment preferences prior to making a recommendation.